UBS Remains Sidelined on Kimberly-Clark (KMB) as Tax Rates Drive 1Q EPS Beat

UBS maintained a Neutral rating on Kimberly Clark (NYSE: KMB), and cut the price target to $134.00 (from $143.00), following the company's 1Q earnings report. KMB reported EPS of $1.53, beating the consensus of $1.51. The beat was largely driven by a tax rate headwind, as the company only grew ~2% on an organic basis.

Analyst Stephen Powers commented, "Though KMB's Q1 EPS of $1.53 beat cons. of $1.51 (missing UBSe of $1.55), results on the whole were disappointing, as not only was the cons. beat largely tax rate-driven (~6-7c), but also KMB grew only ~+2% on an organic basis vs. UBSe/cons. of ~+4%. Though KMB maintained FY16 guidance of $5.95-$6.15 in EPS and +3-5% organic growth, the company made it clear that it will likely realize less pricing than previously forecasted in 2016, given competitive conditions in China (driven by JPY-denominated competitors) and a stabilization of FX rate declines (in markets like Brazil & Russia). We note that these macro-driven warnings echo commentary from PEP and KO earlier in the week, which contributed to sector-wide underperformance last week."

For an analyst ratings summary and ratings history on Kimberly Clark click here. For more ratings news on Kimberly Clark click here.

Shares of Kimberly Clark closed at $126.88 yesterday.

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